| It is interesting to see when someone is starting a | | | | It is also important to factor into your rate the time off |
| bookkeeping business, that often the thought of their | | | | you will require during the year. No one can work 52 |
| rate is left until last and decided upon quickly at the last | | | | weeks in a year, or 8 hours a day every day. It is |
| minute. This is where the business can be in danger | | | | important to look at the total time you have available, |
| from day one. The choice of rate should be one of the | | | | being realistic about the time off you will need. |
| first things that are considered. | | | | If for example you want to earn $50,000 per year, you |
| You will need to understand your rates to be able to | | | | will need to work that out over the realistic available |
| create a cash flow and budget and incorporate these | | | | time, such as 48 weeks in a year, working 30 hours a |
| items into your business plan. Without having clear | | | | week. That is far more realistic than $50,000 over 52 |
| rates, it will be difficult to ascertain if your business will | | | | weeks of 40 hours per week. |
| even be a success if you get enough clients. | | | | There are other additional costs which were non |
| Once you start to think about your rates, it will be | | | | existent as an employee which now will need to be |
| important to factor in many of the components you | | | | catered for as a business owner. Insurance for |
| might not have considered. For example, as an | | | | equipment, professional indemnity insurance and printing |
| employee you might have had annual leave, sick leave, | | | | and stationery costs just to mention a few. I know |
| superannuation and study leave. Additionally you might | | | | these things are all tax deductible; however you will |
| have had your professional memberships paid or even | | | | need enough cash to be able to pay for these |
| income protection insurance. | | | | expenses along the way. |
| If you select a rate just a few dollars more than your | | | | It is also important to remember that a business owner |
| employee rate, it will not be large enough to cover | | | | is also trying to make a profit, not just barely cover |
| those expenses listed above and it certainly will not | | | | costs and then earn the same money as that of an |
| generate a profit. When you are setting your rates, it is | | | | employee as a bookkeeper. The cost of business |
| important to factor in any of the hidden costs that you | | | | increases and your running costs will need to be |
| might now be responsible for as a business owner. | | | | adjusted and reviewed periodically, in turn so will your |
| Take for example your professional development. Not | | | | rates need to be monitored very closely and increased |
| only is your business going to grow based on your | | | | at the appropriate intervals. |
| ability to service clients by staying up to date with the | | | | Keep in mind, if you are starting a bookkeeping |
| bookkeeping industry, but now you will need to pay for | | | | business, do not be trapped into starting on a very low |
| that professional development. You will also need to | | | | rate, just to win clients. It will not be a long term |
| take the time out from billing clients when you | | | | sustainable business model and the type of clients that |
| undertake your development. Not only do you pay to | | | | will select your services based on rate alone, may not |
| attend but you pay again with the lost revenue from | | | | be the type of long term clients you are looking for. |
| attendance! | | | | |